ISBA’s Board of Governors has adopted a resolution reaffirming its opposition to fee splitting with non-lawyers and the ownership of law firms by non-lawyers. Both issues are under active consideration by the ABA Commission on Ethics 20/20 and could come before the ABA House of Delegates this August. ISBA leaders intend to introduce its resolution, along with support from other bars, at the same time.

President-elect John E. Thies presented the resolution at the March 9 meeting of the ISBA Board in Quincy. He noted that the proposed changes in the ABA Model Rules of Professional Conduct run counter not only to ISBA policy but also to ABA policy established in 2000 that stated: “The law governing lawyers that prohibits lawyers from sharing legal fees with non-lawyers and from directly or indirectly transferring to non-lawyers ownership or control over entities practicing law should not be revised.”

Earlier in 2000, ISBA’s Assembly adopted a report urging the ABA House to reject proposed changes to permit sharing of fees with non-lawyers and ownership of law firms by non-lawyers. That policy remains in effect.

Member Comments

Exactly what is the ISBA policy on non-lawyers owning law firms? My specific question, as an estate planning lawyer, is whether a lawyer's revocable living trust, if only the lawyer can amend the trust and if the lawyer is the sole trustee, can own the stock of his/her professional service corporation. The Illinois Rules of Professional Conduct really don't get into that much detail. I don't see why not, nor do I see why the Supreme Court or the ISBA should be micro-managing lawyers' estate plans in this matter. At least one other highly respected estate planning lawyer in my area says he isn't comfortable with transferring the stock into the trust, for fear of running afoul of the RPC. Let the lawyers avoid probate like everyone else.
Richard O. Erdmann

— Richard Erdmann on March 13, 2012 at 11:20 am

I agree that splitting lawyer fees with "runners" and other such ambulance chasing devices should be totally and explicitly prohibited.
However, I believe that especially for smaller firms fee splitting with other professionals and marketers should be allowed, although subject to appropriate scrutiny. For example, if I want to run a marketing campaign to grow my client base in, for example, trusts and estates, that would normally cost $50,000 but my firm is unable to afford it, why not be able to "share fees" with a marketing firm for a percentage fee of new business earned? As long as the law firm is responsible for directing the marketing efforts so that it comports to all the notions of class and ethical rules, I see no reason why such a fee-splitting should be prohibited.
I could be wrong about this, and so I appreciate replies to this line of thought. But to extend legal services to those who are not already wealthy, smaller firms need additional tools to compete against the large firms that have substantial financial resources and lines of credit built up over a century or more of practice.